PCSB Financial Corporation Announces Fourth Fiscal Quarter and Year End Financial Results and Declares Quarterly Cash Dividend
YORKTOWN HEIGHTS, N.Y., Aug. 01, 2019 (GLOBE NEWSWIRE) -- PCSB Financial Corporation (the “Company”) (NASDAQ: PCSB), parent of PCSB Bank (the "Bank"), today announced its results for the three months and year ended June 30, 2019. For the three months ended June 30, 2019, net income was $1.7 million, or $0.10 per share, compared to $2.0 million, or $0.12 per share, for the three months ended March 31, 2019 and $2.7 million, or $0.16 per share, for the three months ended June 30, 2018. Provision for loan losses was $737,000, or $0.03 per share, net of tax, for the three months ended June 30, 2019, driven by a $157.4 million increase in net loans during the quarter. Net income was $8.3 million, or $0.50 per share, for the year ended June 30, 2019 compared to $6.6 million, or $0.39 per share, for the year ended June 30, 2018.
On a non-GAAP basis, which excludes certain nonrecurring items, the Company recorded net income of $1.7 million, or $0.10 per share for the three months ended June 30, 2019 as compared to net income of $2.0 million, or $0.12 per share for the three months ended March 31, 2019 and $2.2 million, or $0.13 per share, for the three months ended June 30, 2018. On a non-GAAP basis, the Company recorded net income of $8.2 million, or $0.50 per share, for the year ended June 30, 2019 compared to $7.6 million, or $0.46 per share, for the year ended June 30, 2018. Reconciliations of GAAP to non-GAAP measures appear at the end of this release.
In conjunction with grants made under the stockholder-approved 2018 Equity Incentive Plan, the Company recorded $829,000, or $627,000 net of taxes, of stock-based compensation expense in the current and prior quarter. No such expense was recorded in the prior year quarter. This additional expense reduced earnings per share by $0.04 in the current and prior quarter and had no impact in the prior year quarter as the plan was not in effect. Stock-based compensation expense for the year ended June 30, 2019 was $2.1 million, or $1.6 million net of taxes, or $0.10 per share, compared to no such expense in the year ended June 30, 2018.
President’s Comments
Commenting on the Company’s results, Joseph D. Roberto, Chairman, President and Chief Executive Officer of PCSB Financial Corporation, said, “I am pleased to report continued progress and strong growth in our core business as we complete our second fiscal year as a public company. Strong loan growth in the fourth quarter has resulted in a year over year 21.1% increase in total loan receivables while driving increased non-interest income through swap fees. Although the fourth quarter earnings were impacted by the loan loss provision on the growth in the loan portfolio, the increase in loans is expected to have a positive impact on future earnings. In addition, asset quality remains extremely strong as the ratio of non-performing assets to total assets decreased to 0.24% at June 30, 2019 from 0.43% at June 30, 2018. We are also pleased to report that although our year over year net interest margin decreased 7 basis points to 2.96% from 3.03%, our linked quarter’s net interest margin held steady at 2.94%. During the fourth fiscal quarter we also announced the commencement of our second share repurchase program as we continue to deploy our excess capital. As we move forward in our third year as a public company, we hope to continue to build on these results in order to create value for our shareholders.”
Year End Results
Net income totaled $8.3 million for the year ended June 30, 2019, an increase of $1.7 million, or 26.0%, compared to $6.6 million for the year ended June 30, 2018. The increase is primarily due to a $1.1 million increase in net interest income, a $2.3 million decrease in income tax expense, and a $583,000 increase in noninterest income, partially offset by a $1.9 million increase in noninterest expense and an increase of $394,000 in the provision for loan losses. The increase in net interest income was primarily due to a $70.1 million, or 5.1%, increase in average interest earning assets, partially offset by a 7 basis point decrease in net interest margin. Despite continued asset growth and a higher yielding asset mix, which resulted in a 21 basis point increase in the yield on interest earning assets, the margin has been impacted by rising funding costs due to higher short-term interest rates along with competitive pricing, which caused a 37 basis point increase in the average cost of interest bearing liabilities. The income tax expense decrease is a result of a $1.6 million one-time deferred tax remeasurement charge recorded in the prior year, and a lower effective tax rate in the current year, both a result of federal tax reform legislation enacted in December 2017. The increase in noninterest income is largely due to a $507,000 increase in swap income. Despite continued improvements in asset quality, which resulted in minimal charge-offs and a decrease in the ratio of non-performing loans as a percent of total loans receivable from 0.66% as of June 30, 2018 to 0.25% as of June 30, 2019, a $190.8 million increase in the loan portfolio resulted in a provision for loan losses of $808,000 for the year, an increase of $394,000 compared to the prior year. As of June 30, 2019, the allowance for loan losses as a percent of total loans receivable was 0.52%, a decrease from 0.54% as of June 30, 2018.
Income Statement Summary
Net interest income decreased $673,000, or 5.9%, to $10.8 million for the three months ended June 30, 2019, compared to the same period in 2018 and increased $22,000 from the previous quarter. The decrease in net interest income compared to the prior year period is primarily a result of a 29 basis point decrease in net interest margin, partially offset by a $45.8 million, or 3.2%, increase in average interest earning assets. Included in prior year quarter net interest income is $879,000 of interest income recorded from the pay-off of two nonaccrual loans. Excluding this interest income, net interest margin for the quarter ended June 30, 2018 would have been 2.98%. Despite a 29 basis point increase in the yield on interest earning assets (adjusted for the impact of the nonaccrual loan interest discussed above), the cost of interest-bearing deposits increased 47 basis points to 1.12% for the three months ended June 30, 2019 compared to 0.65% for the three months ended June 30, 2018. The Company has experienced a shift in the deposit mix as some customers in lower yielding saving products moved to higher rate money market and time deposit accounts. The increase in average interest earning assets is primarily due to a $69.7 million increase in average loans, partially offset by a $28.3 million decrease in average investment securities.
Net interest income was largely unchanged compared to the prior quarter as a result of minimal growth in average interest earning assets and an unchanged net interest margin. Net interest margin remained at 2.94% as a 6 basis point increase in the yield on assets, driven by a shift from lower yielding cash and cash equivalent and investment securities into higher yielding loans, was offset by an 8 basis point increase in the cost of interest-bearing liabilities.
The provision for loan losses was $737,000 for the three months ended June 30, 2019 compared to $7,000 in the prior quarter and $25,000 for the same period in 2018. Charge-offs, net of recoveries, were $18,000 for the three months ended June 30, 2019 compared to $5,000 for the three months ended March 31, 2019 and recoveries, net of charge-offs, of $255,000 for the three months ended June 30, 2018. Loans classified as substandard or doubtful decreased $559,000, or 6.2%, to $8.5 million at June 30, 2019 from $9.0 million at March 31, 2019 and decreased $6.9 million, or 45.0%, from $15.4 million at June 30, 2018. Non-performing loans as a percent of total loans receivable was 0.25% as of June 30, 2019, a decrease from 0.30% as of March 31, 2019 and 0.66% as of June 30, 2018.
Noninterest income increased $361,000 to $962,000 for the three months ended June 30, 2019 compared to the same period in 2018, primarily due to increases of $361,000 in swap income and $68,000 in fees and services charges, partially offset by a $56,000 decrease in gains on the sale of securities. Noninterest income increased $383,000 from the three months ended March 31, 2019, primarily due to a $361,000 increase in swap income.
Noninterest expense increased $444,000 to $8.7 million for the three months ended June 30, 2019 compared to the same period in 2018 and increased $10,000 compared to the three months ended March 31, 2019. The $444,000 increase from the prior year period was caused primarily by $829,000 of stock-based compensation expense recorded in the current quarter, compared to no such expense in the prior year period, partially offset by a $370,000 loss on a receivable recorded in the prior year quarter and a $15,000 decrease in all other noninterest expenses.
The effective income tax rate was 26.2% for the three months ended June 30, 2019, as compared to 23.9% for the three months ended March 31, 2019 and 28.7% for the three months ended June 30, 2018. Beginning on July 1, 2018, the Company began to realize the full benefits of the reduction in the corporate income tax rate which became effective in January 2018.
Balance Sheet Summary
Total assets increased $157.4 million to $1.64 billion at June 30, 2019 from $1.48 billion at June 30, 2018. This increase was primarily due to an increase of $190.8 million in net loans receivable, partially offset by a decrease of $40.9 million in total investment securities. The $190.8 million increase in loans was the result of $213.6 million of originations and $94.5 million of loan purchases, partially offset by $117.3 million of net amortization and repayments on the remaining portfolio. Commercial mortgages increased $156.1 million or 31.5%, commercial loans increased $29.5 million, or 28.3%, and residential mortgages increased $14.6 million, or 5.8%, with net decreases in all other loan types of $9.4 million.
Total liabilities increased $163.6 million to $1.36 billion at June 30, 2019 from $1.19 billion at June 30, 2018. This increase was primarily due to increases of $92.4 million in FHLB advances and $68.4 million, or 5.9%, in total deposits.
Total shareholders’ equity decreased $6.3 million to $281.3 million at June 30, 2019 from $287.6 million at June 30, 2018. This decrease was primarily due to the repurchase of $18.3 million in common stock and $2.2 million of cash dividends declared, partially offset by net income of $8.3 million, $4.1 million of stock-based compensation and reduction in unearned ESOP shares for plan shares earned during the period, and other comprehensive income of $1.9 million. During the current quarter, the Company announced its second stock repurchase plan, under which up to 890,021 shares may be repurchased, representing 5% of its outstanding shares of common stock.
At June 30, 2019, the Company’s book value per share and tangible book value per share were $15.80 and $15.44, respectively, compared to $15.83 and $15.47, respectively, at June 30, 2018. Reconciliations of book value per share (GAAP measure) to tangible book value per share (non-GAAP measure) appear at the end of this release. At June 30, 2019, the Bank was considered “well capitalized” under applicable regulatory guidelines.
Dividend
The Board of Directors declared a regular quarterly cash dividend of $0.04 per share. The dividend is payable on or about August 30, 2019 to stockholders of record on August 16, 2019.
About PCSB Financial Corporation and PCSB Bank
PCSB Financial Corporation is the bank holding company for PCSB Bank. PCSB Bank is a New York-chartered commercial bank and has served the banking needs of its customers in the Lower Hudson Valley of New York State since 1871. It operates from its executive offices/headquarters and 15 branch offices located in Dutchess, Putnam, Rockland and Westchester Counties in New York.
This News Release contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements may be identified by use of words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions.
Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the Company's business; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company's financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive than the Company anticipates; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates. The Company assumes no obligation to update any forward-looking statements except as may be required by applicable law or regulation.
Contact: Joseph D. Roberto
Chairman, President and Chief Executive Officer
(914) 248-7272
PCSB Financial Corporation and Subsidiaries
Consolidated Balance Sheets (unaudited)
(amounts in thousands, except share data)
| June 30, | June 30, | |||||||
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 58,756 | $ | 60,684 | ||||
| Federal funds sold | 1,273 | 1,461 | ||||||
| Cash and cash equivalents | 60,029 | 62,145 | ||||||
| Held to maturity debt securities, at amortized cost (fair value of $346,243 and $343,188, respectively) |
345,545 | 353,183 | ||||||
| Available for sale debt securities, at fair value | 72,228 | 105,472 | ||||||
| Total investment securities | 417,773 | 458,655 | ||||||
| Loans receivable, net of allowance for loan losses of $5,664 and $4,904, respectively | 1,093,121 | 902,336 | ||||||
| Accrued interest receivable | 4,797 | 4,358 | ||||||
| Federal Home Loan Bank stock | 6,255 | 2,050 | ||||||
| Premises and equipment, net | 11,802 | 11,598 | ||||||
| Deferred tax asset, net | 2,478 | 2,622 | ||||||
| Foreclosed real estate | 1,158 | 460 | ||||||
| Bank-owned life insurance | 24,291 | 23,747 | ||||||
| Goodwill | 6,106 | 6,106 | ||||||
| Other intangible assets | 323 | 433 | ||||||
| Other assets | 9,446 | 5,677 | ||||||
| Total assets | $ | 1,637,579 | $ | 1,480,187 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Interest bearing deposits | $ | 1,084,442 | $ | 1,025,574 | ||||
| Non-interest bearing deposits | 141,379 | 131,883 | ||||||
| Total deposits | 1,225,821 | 1,157,457 | ||||||
| Mortgage escrow funds | 9,355 | 8,803 | ||||||
| Advances from Federal Home Loan Bank | 111,216 | 18,841 | ||||||
| Other liabilities | 9,880 | 7,527 | ||||||
| Total liabilities | 1,356,272 | 1,192,628 | ||||||
| Commitments and contingencies | - | - | ||||||
| Preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding as of June 30, 2019 and June 30, 2018) | - | - | ||||||
| Common stock ($0.01 par value, 200,000,000 shares authorized, 18,712,295 and 18,165,110 shares issued, and 17,804,039 and 18,165,110 shares outstanding as of June 30, 2019 and June 30, 2018, respectively) | 187 | 182 | ||||||
| Additional paid in capital | 182,129 | 179,045 | ||||||
| Retained earnings | 134,500 | 128,365 | ||||||
| Unearned compensation - ESOP | (12,114 | ) | (13,083 | ) | ||||
| Accumulated other comprehensive loss, net of income taxes | (5,090 | ) | (6,950 | ) | ||||
| Treasury stock, at cost (908,256 shares as of June 30, 2019 and no shares as of June 30, 2018) | (18,305 | ) | - | |||||
| Total shareholders' equity | 281,307 | 287,559 | ||||||
| Total liabilities and shareholders' equity | $ | 1,637,579 | $ | 1,480,187 | ||||
PCSB Financial Corporation and Subsidiaries
Consolidated Statements of Operations (unaudited)
(amounts in thousands, except share and per share data)
| Three Months Ended | Year Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Interest and dividend income | ||||||||||||||||
| Loans receivable | $ | 10,987 | $ | 10,706 | $ | 41,619 | $ | 37,798 | ||||||||
| Investment securities | 2,609 | 2,384 | 10,022 | 9,266 | ||||||||||||
| Federal funds and other | 356 | 268 | 1,806 | 896 | ||||||||||||
| Total interest and dividend income | 13,952 | 13,358 | 53,447 | 47,960 | ||||||||||||
| Interest expense | ||||||||||||||||
| Deposits | 3,005 | 1,600 | 10,177 | 5,554 | ||||||||||||
| FHLB advances | 188 | 326 | 566 | 769 | ||||||||||||
| Total interest expense | 3,193 | 1,926 | 10,743 | 6,323 | ||||||||||||
| Net interest income | 10,759 | 11,432 | 42,704 | 41,637 | ||||||||||||
| Provision for loan losses | 737 | 25 | 808 | 414 | ||||||||||||
| Net interest income after provision for loan losses | 10,022 | 11,407 | 41,896 | 41,223 | ||||||||||||
| Noninterest income | ||||||||||||||||
| Fees and service charges | 452 | 384 | 1,763 | 1,529 | ||||||||||||
| Bank-owned life insurance | 134 | 138 | 544 | 568 | ||||||||||||
| Swap income | 361 | - | 507 | - | ||||||||||||
| Gains on sales of securities, net | 7 | 63 | 62 | 236 | ||||||||||||
| Other | 8 | 16 | 226 | 186 | ||||||||||||
| Total noninterest income | 962 | 601 | 3,102 | 2,519 | ||||||||||||
| Noninterest expense | ||||||||||||||||
| Salaries and employee benefits | 5,270 | 4,889 | 21,611 | 19,419 | ||||||||||||
| Occupancy and equipment | 1,320 | 1,289 | 5,185 | 5,193 | ||||||||||||
| Communications and data processing | 523 | 527 | 1,953 | 1,974 | ||||||||||||
| Professional fees | 369 | 452 | 1,551 | 1,709 | ||||||||||||
| Postage, printing, stationary and supplies | 132 | 143 | 586 | 578 | ||||||||||||
| FDIC assessment | 99 | 93 | 421 | 328 | ||||||||||||
| Advertising | - | - | 349 | 456 | ||||||||||||
| Loss on receivable | - | 370 | 90 | 570 | ||||||||||||
| Amortization of intangible assets | 25 | 29 | 110 | 126 | ||||||||||||
| Other operating expenses | 970 | 472 | 2,138 | 1,763 | ||||||||||||
| Total noninterest expense | 8,708 | 8,264 | 33,994 | 32,116 | ||||||||||||
| Net income before income tax expense | 2,276 | 3,744 | 11,004 | 11,626 | ||||||||||||
| Income tax expense | 597 | 1,075 | 2,686 | 5,022 | ||||||||||||
| Net income | $ | 1,679 | $ | 2,669 | $ | 8,318 | $ | 6,604 | ||||||||
| Earnings per common share: | ||||||||||||||||
| Basic | $ | 0.10 | $ | 0.16 | $ | 0.50 | $ | 0.39 | ||||||||
| Diluted | $ | 0.10 | $ | 0.16 | $ | 0.50 | $ | 0.39 | ||||||||
| Weighted average common shares: | ||||||||||||||||
| Basic | 16,033,505 | 16,844,747 | 16,492,760 | 16,802,894 | ||||||||||||
| Diluted | 16,099,846 | 16,844,747 | 16,527,117 | 16,802,894 | ||||||||||||
PCSB Financial Corporation and Subsidiaries
Net Interest Margin Analysis (unaudited)
(dollar amounts in thousands)
| Three Months Ended June 30, | |||||||||||||||||||||||
| 2019 | 2018 | ||||||||||||||||||||||
| Average Balance | Interest / Dividends | Average Rate | Average Balance | Interest / Dividends | Average Rate | ||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Loans receivable | $ | 970,707 | $ | 10,987 | 4.53 | % | $ | 900,998 | $ | 10,706 | 4.75 | % | |||||||||||
| Investment securities | 436,903 | 2,609 | 2.39 | 465,206 | 2,384 | 2.05 | |||||||||||||||||
| Other interest-earning assets | 55,988 | 356 | 2.55 | 51,605 | 268 | 2.09 | |||||||||||||||||
| Total interest-earning assets | 1,463,598 | 13,952 | 3.81 | 1,417,809 | 13,358 | 3.77 | |||||||||||||||||
| Non-interest-earning assets | 58,295 | 57,004 | |||||||||||||||||||||
| Total assets | $ | 1,521,893 | $ | 1,474,813 | |||||||||||||||||||
| Liabilities and equity: | |||||||||||||||||||||||
| NOW accounts | $ | 120,577 | 53 | 0.18 | $ | 115,711 | 51 | 0.18 | |||||||||||||||
| Money market accounts | 143,576 | 428 | 1.20 | 46,104 | 70 | 0.61 | |||||||||||||||||
| Savings accounts and escrow | 373,238 | 239 | 0.26 | 484,463 | 293 | 0.24 | |||||||||||||||||
| Time deposits | 434,073 | 2,285 | 2.11 | 343,027 | 1,186 | 1.39 | |||||||||||||||||
| Total interest-bearing deposits | 1,071,464 | 3,005 | 1.12 | 989,305 | 1,600 | 0.65 | |||||||||||||||||
| Federal Home Loan Bank advances | 29,283 | 188 | 2.57 | 66,740 | 326 | 1.96 | |||||||||||||||||
| Total interest-bearing liabilities | 1,100,747 | 3,193 | 1.16 | 1,056,045 | 1,926 | 0.73 | |||||||||||||||||
| Non-interest-bearing deposits | 133,706 | 125,898 | |||||||||||||||||||||
| Other non-interest-bearing liabilities | 7,403 | 6,671 | |||||||||||||||||||||
| Total liabilities | 1,241,856 | 1,188,614 | |||||||||||||||||||||
| Total shareholders' equity | 280,037 | 286,199 | |||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,521,893 | $ | 1,474,813 | |||||||||||||||||||
| Net interest income | $ | 10,759 | $ | 11,432 | |||||||||||||||||||
| Interest rate spread (1) | 2.65 | 3.04 | |||||||||||||||||||||
| Net interest margin (2) | 2.94 | 3.23 | |||||||||||||||||||||
| Average interest-earning assets to interest-bearing liabilities | 132.96 | % | 134.26 | % | |||||||||||||||||||
| (1) Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities. | |||||||||||||||||||||||
| (2) Net interest margin represents annualized net interest income divided by average interest-earning assets. | |||||||||||||||||||||||
PCSB Financial Corporation and Subsidiaries
Net Interest Margin Analysis (unaudited) - Continued
(dollar amounts in thousands)
| Year Ended June 30, | |||||||||||||||||||||||
| 2019 | 2018 | ||||||||||||||||||||||
| Average Balance | Interest / Dividends | Average Rate | Average Balance | Interest / Dividends | Average Rate | ||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Loans receivable | $ | 924,182 | $ | 41,619 | 4.50 | % | $ | 846,353 | $ | 37,798 | 4.47 | % | |||||||||||
| Investment securities | 444,024 | 10,022 | 2.26 | 474,201 | 9,266 | 1.95 | |||||||||||||||||
| Other interest-earning assets | 76,950 | 1,806 | 2.35 | 54,528 | 896 | 1.64 | |||||||||||||||||
| Total interest-earning assets | 1,445,156 | 53,447 | 3.70 | 1,375,082 | 47,960 | 3.49 | |||||||||||||||||
| Non-interest-earning assets | 56,075 | 57,696 | |||||||||||||||||||||
| Total assets | $ | 1,501,231 | $ | 1,432,778 | |||||||||||||||||||
| Liabilities and equity: | |||||||||||||||||||||||
| NOW accounts | $ | 118,286 | 210 | 0.18 | $ | 113,952 | 197 | 0.17 | |||||||||||||||
| Money market accounts | 107,449 | 1,216 | 1.13 | 36,917 | 163 | 0.44 | |||||||||||||||||
| Savings accounts and escrow | 411,251 | 1,019 | 0.25 | 502,310 | 1,223 | 0.24 | |||||||||||||||||
| Time deposits | 414,676 | 7,732 | 1.86 | 315,652 | 3,971 | 1.26 | |||||||||||||||||
| Total interest-bearing deposits | 1,051,662 | 10,177 | 0.97 | 968,831 | 5,554 | 0.57 | |||||||||||||||||
| Federal Home Loan Bank advances | 24,117 | 566 | 2.34 | 42,719 | 769 | 1.80 | |||||||||||||||||
| Total interest-bearing liabilities | 1,075,779 | 10,743 | 1.00 | 1,011,550 | 6,323 | 0.63 | |||||||||||||||||
| Non-interest-bearing deposits | 132,057 | 130,196 | |||||||||||||||||||||
| Other non-interest-bearing liabilities | 8,108 | 7,360 | |||||||||||||||||||||
| Total liabilities | 1,215,944 | 1,149,106 | |||||||||||||||||||||
| Total shareholders' equity | 285,287 | 283,672 | |||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,501,231 | $ | 1,432,778 | |||||||||||||||||||
| Net interest income | $ | 42,704 | $ | 41,637 | |||||||||||||||||||
| Interest rate spread (1) | 2.70 | 2.86 | |||||||||||||||||||||
| Net interest margin (2) | 2.96 | 3.03 | |||||||||||||||||||||
| Average interest-earning assets to interest-bearing liabilities | 134.34 | % | 135.94 | % | |||||||||||||||||||
| (1) Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities. | |||||||||||||||||||||||
| (2) Net interest margin represents annualized net interest income divided by average interest-earning assets. | |||||||||||||||||||||||
PCSB Financial Corporation and Subsidiaries
Condensed Financial Information (unaudited)
(amounts in thousands, except per share data)
| As of | |||||||||||||||
| June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
|||||||||||
| Condensed Balance Sheets | |||||||||||||||
| Cash and cash equivalents | $ | 60,029 | $ | 87,105 | $ | 143,119 | $ | 68,323 | $ | 62,145 | |||||
| Total investment securities | 417,773 | 440,014 | 452,463 | 441,748 | 458,655 | ||||||||||
| Loans receivable, net | 1,093,121 | 935,680 | 904,377 | 905,093 | 902,336 | ||||||||||
| Other assets | 66,656 | 60,959 | 57,356 | 59,331 | 57,051 | ||||||||||
| Total assets | $ | 1,637,579 | $ | 1,523,758 | $ | 1,557,315 | $ | 1,474,495 | $ | 1,480,187 | |||||
| Total deposits and escrow | $ | 1,235,176 | $ | 1,209,868 | $ | 1,234,409 | $ | 1,158,102 | $ | 1,166,260 | |||||
| Advances from Federal Home Loan Bank | 111,216 | 26,248 | 26,279 | 18,810 | 18,841 | ||||||||||
| Other liabilities | 9,880 | 9,326 | 7,845 | 7,706 | 7,527 | ||||||||||
| Total liabilities | 1,356,272 | 1,245,442 | 1,268,533 | 1,184,618 | 1,192,628 | ||||||||||
| Total shareholders' equity | 281,307 | 278,316 | 288,782 | 289,877 | 287,559 | ||||||||||
| Total liabilities and shareholders' equity | $ | 1,637,579 | $ | 1,523,758 | $ | 1,557,315 | $ | 1,474,495 | $ | 1,480,187 | |||||
| Quarter Ended | Year Ended | ||||||||||||||||||||
| June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
June 30, 2019 |
June 30, 2018 |
|||||||||||||||
| Condensed Income Statements | |||||||||||||||||||||
| Interest income | $ | 13,952 | $ | 13,646 | $ | 13,240 | $ | 12,609 | $ | 13,358 | $ | 53,447 | $ | 47,960 | |||||||
| Interest expense | 3,193 | 2,909 | 2,496 | 2,145 | 1,926 | 10,743 | 6,323 | ||||||||||||||
| Net interest income | 10,759 | 10,737 | 10,744 | 10,464 | 11,432 | 42,704 | 41,637 | ||||||||||||||
| Provision for loan losses | 737 | 7 | 6 | 58 | 25 | 808 | 414 | ||||||||||||||
| Noninterest income | 962 | 579 | 920 | 641 | 601 | 3,102 | 2,519 | ||||||||||||||
| Noninterest expense | 8,708 | 8,698 | 8,580 | 8,008 | 8,264 | 33,994 | 32,116 | ||||||||||||||
| Income before income tax expense | 2,276 | 2,611 | 3,078 | 3,039 | 3,744 | 11,004 | 11,626 | ||||||||||||||
| Income tax expense | 597 | 625 | 754 | 710 | 1,075 | 2,686 | 5,022 | ||||||||||||||
| Net income | $ | 1,679 | $ | 1,986 | $ | 2,324 | $ | 2,329 | $ | 2,669 | $ | 8,318 | $ | 6,604 | |||||||
| Earnings per share: | |||||||||||||||||||||
| Basic | $ | 0.10 | $ | 0.12 | $ | 0.14 | $ | 0.14 | $ | 0.16 | $ | 0.50 | $ | 0.39 | |||||||
| Diluted | $ | 0.10 | $ | 0.12 | $ | 0.14 | $ | 0.14 | $ | 0.16 | $ | 0.50 | $ | 0.39 | |||||||
PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)
| Quarter Ended | Year Ended | ||||||||||||||||||||
| June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
June 30, 2019 |
June 30, 2018 |
|||||||||||||||
| Performance Ratios (1): | |||||||||||||||||||||
| Return on average assets | 0.44 | % | 0.52 | % | 0.62 | % | 0.63 | % | 0.72 | % | 0.55 | % | 0.46 | % | |||||||
| Return on average equity | 2.40 | % | 2.83 | % | 3.20 | % | 3.22 | % | 3.73 | % | 2.92 | % | 2.33 | % | |||||||
| Interest rate spread | 2.65 | % | 2.67 | % | 2.75 | % | 2.73 | % | 3.04 | % | 2.70 | % | 2.86 | % | |||||||
| Net interest margin | 2.94 | % | 2.94 | % | 3.00 | % | 2.94 | % | 3.23 | % | 2.96 | % | 3.03 | % | |||||||
| Adjusted Efficiency ratio (2) | 74.34 | % | 76.86 | % | 74.12 | % | 72.11 | % | 71.17 | % | 74.37 | % | 73.54 | % | |||||||
| Noninterest income to average assets | 0.25 | % | 0.15 | % | 0.25 | % | 0.17 | % | 0.16 | % | 0.21 | % | 0.18 | % | |||||||
| Noninterest expense to average assets | 2.29 | % | 2.29 | % | 2.30 | % | 2.17 | % | 2.24 | % | 2.26 | % | 2.24 | % | |||||||
| Average interest-earning assets to average interest-bearing liabilities | 132.96 | % | 133.68 | % | 135.40 | % | 135.38 | % | 134.26 | % | 134.34 | % | 135.94 | % | |||||||
| Average equity to average assets | 18.40 | % | 18.52 | % | 19.48 | % | 19.63 | % | 19.41 | % | 19.00 | % | 19.80 | % | |||||||
| Dividend payout ratio (3) | 39.43 | % | 24.97 | % | 22.42 | % | 21.64 | % | 18.88 | % | 26.24 | % | 7.63 | % | |||||||
PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited) - Continued
(dollar amounts in thousands, except share and per share data)
| As of and for the quarter ended | |||||||||||||||
| June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
|||||||||||
| Loans to deposits | 89.17 | % | 77.83 | % | 73.81 | % | 78.49 | % | 77.96 | % | |||||
| Share Data: | |||||||||||||||
| Shares outstanding | 17,804,039 | 17,804,039 | 18,490,225 | 18,165,110 | 18,165,110 | ||||||||||
| Book value per common share | $ | 15.80 | $ | 15.63 | $ | 15.62 | $ | 15.96 | $ | 15.83 | |||||
| Tangible book value per common share (4) | $ | 15.44 | $ | 15.27 | $ | 15.27 | $ | 15.60 | $ | 15.47 | |||||
| Asset Quality Ratios: | |||||||||||||||
| Non-performing loans receivable | $ | 2,727 | $ | 2,847 | $ | 3,576 | $ | 5,630 | $ | 6,002 | |||||
| Non-performing assets | $ | 3,885 | $ | 3,500 | $ | 4,148 | $ | 6,384 | $ | 6,462 | |||||
| Allowance for loan losses as a percent of total loans receivable | 0.52 | % | 0.53 | % | 0.54 | % | 0.54 | % | 0.54 | % | |||||
| Total valuation adjustment as a percent of total gross loans receivable (5) | 0.62 | % | 0.66 | % | 0.69 | % | 0.70 | % | 0.71 | % | |||||
| Allowance for loan losses as a percent of non-performing loans receivable | 207.70 | % | 173.67 | % | 138.23 | % | 88.08 | % | 81.71 | % | |||||
| Non-performing loans as a percent of total loans receivable, net | 0.25 | % | 0.30 | % | 0.39 | % | 0.62 | % | 0.66 | % | |||||
| Non-performing assets as a percent of total assets | 0.24 | % | 0.23 | % | 0.27 | % | 0.43 | % | 0.44 | % | |||||
| Net charge-offs (recoveries) | $ | 18 | $ | 5 | $ | 22 | $ | 3 | $ | (255 | ) | ||||
| Net charge-offs (recoveries) to average outstanding loans during the period (1) | 0.01 | % | 0.00 | % | 0.00 | % | 0.00 | % | (0.11 | %) | |||||
| Capital Ratios (6): | |||||||||||||||
| Tier 1 capital (to adjusted total assets) | 13.81 | % | 13.71 | % | 13.78 | % | 13.80 | % | 13.61 | % | |||||
| Common equity Tier 1 capital (to risk-weighted assets) | 17.96 | % | 20.47 | % | 20.73 | % | 21.17 | % | 21.11 | % | |||||
| Tier 1 capital (to risk-weighted assets) | 17.96 | % | 20.47 | % | 20.73 | % | 21.17 | % | 21.11 | % | |||||
| Total capital (to risk-weighted assets) | 18.45 | % | 20.96 | % | 21.23 | % | 21.68 | % | 21.62 | % | |||||
| (1) Performance ratios are annualized. | |||||||||||||||
| (2) Adjusted efficiency ratio is a non-GAAP measure and is defined as noninterest expense, less certain nonrecurring items, divided by operating revenue, which is equal to net interest income plus non-interest income excluding certain nonrecurring items. In our judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the impact of certain one-time items and other discrete items that are unrelated to our core business. Reconciliations of GAAP to non-GAAP measures appear at the end of this release. | |||||||||||||||
| (3) Dividends declared per share divided by net income per share. | |||||||||||||||
| (4) Tangible book value per share is a non-GAAP measure and equals total shareholders’ equity, less goodwill and other intangible assets, divided by shares outstanding. We believe this disclosure may be meaningful to those investors who seek to evaluate our equity without giving effect to goodwill and other intangible assets. Reconciliations of GAAP to non-GAAP measures appear at the end of this release. | |||||||||||||||
PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited) - Continued
(dollar amounts in thousands)
| (5) Loans acquired in 2015 as part of the CMS Bancorp. Inc./CMS Bank acquisition were recorded at their estimated fair value at the acquisition date and did not include a carry-over of the related pre-acquisition allowance for loan losses. Total valuation adjustments equal the allowance for loan losses plus the remaining discounts on acquired loans. We believe this ratio provides investors a more meaningful comparison to periods presented prior to the 2015 acquisition, as well as to our peers. Reconciliations of GAAP to non-GAAP measures appear at the end of this release. |
| (6) Represents Bank ratios. |
PCSB Financial Corporation and Subsidiaries
Loan and Deposit Portfolio (unaudited)
(amounts in thousands)
| As of | |||||||||||||||
| June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
|||||||||||
| Mortgage loans: | |||||||||||||||
| Residential mortgages | $ | 265,167 | $ | 261,970 | $ | 248,575 | $ | 249,894 | $ | 250,578 | |||||
| Commercial mortgage | 651,396 | 499,284 | 499,930 | 495,944 | 495,265 | ||||||||||
| Construction | 13,231 | 16,302 | 16,023 | 16,890 | 17,352 | ||||||||||
| Net deferred loan origination costs | 1,031 | 843 | 842 | 859 | 1,041 | ||||||||||
| Total mortgage loans | 930,825 | 778,399 | 765,370 | 763,587 | 764,236 | ||||||||||
| Commercial and consumer loans: | |||||||||||||||
| Commercial loans | 133,614 | 126,514 | 107,899 | 110,196 | 104,135 | ||||||||||
| Home equity credit lines | 33,204 | 34,525 | 35,029 | 35,191 | 37,395 | ||||||||||
| Consumer and overdrafts | 365 | 459 | 321 | 344 | 745 | ||||||||||
| Net deferred loan origination costs | 777 | 728 | 701 | 734 | 729 | ||||||||||
| Total commercial and consumer loans | 167,960 | 162,226 | 143,950 | 146,465 | 143,004 | ||||||||||
| Total loans receivable | 1,098,785 | 940,625 | 909,320 | 910,052 | 907,240 | ||||||||||
| Allowance for loan loss | (5,664 | ) | (4,945 | ) | (4,943 | ) | (4,959 | ) | (4,904 | ) | |||||
| Loans receivable, net | $ | 1,093,121 | $ | 935,680 | $ | 904,377 | $ | 905,093 | $ | 902,336 | |||||
| As of | |||||||||||||||
| June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
|||||||||||
| Demand deposits | $ | 141,379 | $ | 137,899 | $ | 162,113 | $ | 131,024 | $ | 131,883 | |||||
| Now accounts | 123,069 | 120,353 | 123,251 | 121,449 | 117,875 | ||||||||||
| Money market accounts | 148,134 | 137,197 | 121,146 | 79,266 | 49,885 | ||||||||||
| Savings | 357,844 | 379,550 | 397,460 | 425,189 | 465,441 | ||||||||||
| Time deposits | 455,395 | 427,194 | 421,354 | 396,193 | 392,373 | ||||||||||
| Total deposits | $ | 1,225,821 | $ | 1,202,193 | $ | 1,225,324 | $ | 1,153,121 | $ | 1,157,457 | |||||
PCSB Financial Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures (unaudited)
(dollar amounts in thousands, except share and per share data)
| Quarter Ended | Year Ended | ||||||||||||||||||||
| June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
June 30, 2019 |
June 30, 2018 |
|||||||||||||||
| Computation of Adjusted Net Income and Earnings Per Share | |||||||||||||||||||||
| Net income applicable to common stock | $ | 1,679 | $ | 1,986 | $ | 2,324 | $ | 2,329 | $ | 2,669 | $ | 8,318 | $ | 6,604 | |||||||
| Adjustments (1): | |||||||||||||||||||||
| Losses on other receivables | - | - | 68 | - | 292 | 68 | 424 | ||||||||||||||
| Nonaccrual loan interest earned | - | - | - | - | (694 | ) | - | (788 | ) | ||||||||||||
| Gain on sale of securities | (5 | ) | - | (42 | ) | - | (49 | ) | (47 | ) | (163 | ) | |||||||||
| Gain on sale of bank premises | - | - | (118 | ) | - | - | (118 | ) | - | ||||||||||||
| Deferred tax re-measurement charge | - | - | - | - | - | - | 1,570 | ||||||||||||||
| Adjusted net income | $ | 1,674 | $ | 1,986 | $ | 2,232 | $ | 2,329 | $ | 2,218 | $ | 8,221 | $ | 7,647 | |||||||
| Average number of common shares outstanding: | |||||||||||||||||||||
| Basic | 16,033,505 | 16,204,393 | 16,852,718 | 16,869,100 | 16,844,747 | 16,492,760 | 16,802,894 | ||||||||||||||
| Diluted | 16,099,846 | 16,261,755 | 16,868,464 | 16,869,100 | 16,844,747 | 16,527,117 | 16,802,894 | ||||||||||||||
| GAAP Earnings per share: | |||||||||||||||||||||
| Basic | $ | 0.10 | $ | 0.12 | $ | 0.14 | $ | 0.14 | $ | 0.16 | $ | 0.50 | $ | 0.39 | |||||||
| Diluted | $ | 0.10 | $ | 0.12 | $ | 0.14 | $ | 0.14 | $ | 0.16 | $ | 0.50 | $ | 0.39 | |||||||
| Adjusted earnings per common share: | |||||||||||||||||||||
| Basic | $ | 0.10 | $ | 0.12 | $ | 0.13 | $ | 0.14 | $ | 0.13 | $ | 0.50 | $ | 0.46 | |||||||
| Diluted | $ | 0.10 | $ | 0.12 | $ | 0.13 | $ | 0.14 | $ | 0.13 | $ | 0.50 | $ | 0.46 | |||||||
| (1) Amounts included in income before income tax expense are presented net of tax. | |||||||||||||||||||||
PCSB Financial Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures (unaudited) - Continued
(dollar amounts in thousands, except share and per share data)
| Quarter Ended | Year Ended | ||||||||||||||||||||
| June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
June 30, 2019 |
June 30, 2018 |
|||||||||||||||
| Computation of Efficiency Ratio | |||||||||||||||||||||
| Noninterest expense | $ | 8,708 | $ | 8,698 | $ | 8,580 | $ | 8,008 | $ | 8,264 | $ | 33,994 | $ | 32,116 | |||||||
| Adjustments: | |||||||||||||||||||||
| Losses on other receivables | - | - | (90 | ) | - | (370 | ) | (90 | ) | (570 | ) | ||||||||||
| Adjusted noninterest expense | $ | 8,708 | $ | 8,698 | $ | 8,490 | $ | 8,008 | $ | 7,894 | $ | 33,904 | $ | 31,546 | |||||||
| Net interest income | $ | 10,759 | $ | 10,737 | $ | 10,744 | $ | 10,464 | $ | 11,432 | $ | 42,704 | $ | 41,637 | |||||||
| Noninterest income | 962 | 579 | 920 | 641 | 601 | 3,102 | 2,519 | ||||||||||||||
| Total revenue | 11,721 | 11,316 | 11,664 | 11,105 | 12,033 | 45,806 | 44,156 | ||||||||||||||
| Adjustments: | |||||||||||||||||||||
| Nonaccrual loan interest earned | - | - | - | - | (879 | ) | - | (1,021 | ) | ||||||||||||
| Gain on sale of securities | (7 | ) | - | (55 | ) | - | (63 | ) | (62 | ) | (236 | ) | |||||||||
| Gain on sale of bank premises | - | - | (155 | ) | - | - | (155 | ) | - | ||||||||||||
| Adjusted operating revenue | $ | 11,714 | $ | 11,316 | $ | 11,454 | $ | 11,105 | $ | 11,091 | $ | 45,589 | $ | 42,899 | |||||||
| Efficiency ratio (GAAP) | 74.29 | % | 76.86 | % | 73.56 | % | 72.11 | % | 68.68 | % | 74.21 | % | 72.73 | % | |||||||
| Adjusted efficiency ratio (Non-GAAP) | 74.34 | % | 76.86 | % | 74.12 | % | 72.11 | % | 71.17 | % | 74.37 | % | 73.54 | % | |||||||
PCSB Financial Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures (unaudited) - Continued
(dollar amounts in thousands, except share and per share data)
| As of | |||||||||||||||
| June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
|||||||||||
| Computation of Tangible Book Value per Common Share | |||||||||||||||
| Total shareholders' equity | $ | 281,307 | $ | 278,316 | $ | 288,782 | $ | 289,877 | $ | 287,559 | |||||
| Adjustments: | |||||||||||||||
| Preferred stock | - | - | - | - | - | ||||||||||
| Common shareholders' equity | 281,307 | 278,316 | 288,782 | 289,877 | 287,559 | ||||||||||
| Adjustments: | |||||||||||||||
| Goodwill | (6,106 | ) | (6,106 | ) | (6,106 | ) | (6,106 | ) | (6,106 | ) | |||||
| Other intangible assets | (323 | ) | (348 | ) | (376 | ) | (405 | ) | (433 | ) | |||||
| Tangible common shareholders' equity | $ | 274,878 | $ | 271,862 | $ | 282,300 | $ | 283,366 | $ | 281,020 | |||||
| Common shares outstanding | 17,804,039 | 17,804,039 | 18,490,225 | 18,165,110 | 18,165,110 | ||||||||||
| Book value per share (GAAP) | $ | 15.80 | $ | 15.63 | $ | 15.62 | $ | 15.96 | $ | 15.83 | |||||
| Adjustments: | |||||||||||||||
| Effects of intangible assets | (0.36 | ) | (0.36 | ) | (0.35 | ) | (0.36 | ) | (0.36 | ) | |||||
| Tangible book value per common share (Non-GAAP) | $ | 15.44 | $ | 15.27 | $ | 15.27 | $ | 15.60 | $ | 15.47 | |||||
| Quarter Ended | |||||||||||||||
| June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
|||||||||||
| Computation of valuation adjustment | |||||||||||||||
| Allowance for loan losses | $ | 5,664 | $ | 4,945 | $ | 4,943 | $ | 4,959 | $ | 4,904 | |||||
| Add: Purchase accounting discounts on acquired loans | 1,180 | 1,262 | 1,349 | 1,442 | 1,538 | ||||||||||
| Total valuation adjustments | $ | 6,844 | $ | 6,207 | $ | 6,292 | $ | 6,401 | $ | 6,442 | |||||
| Total gross loans | $ | 1,098,785 | $ | 940,625 | $ | 909,320 | $ | 910,052 | $ | 907,240 | |||||
| Total valuation adjustments as a percent of total gross loans | 0.62 | % | 0.66 | % | 0.69 | % | 0.70 | % | 0.71 | % | |||||
PCSB Financial Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures (unaudited) - Continued
(dollar amounts in thousands, except share and per share data)
| Three Months Ended | Year Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Computation of Adjusted Effective Tax Rate | ||||||||||||||||
| Net income before income tax expense | $ | 2,276 | $ | 3,744 | $ | 11,004 | $ | 11,626 | ||||||||
| Income tax expense | 597 | 1,075 | 2,686 | 5,022 | ||||||||||||
| Adjustments: | ||||||||||||||||
| Deferred tax re-measurement charge | - | - | - | (1,570 | ) | |||||||||||
| Adjusted income tax expense | $ | 597 | $ | 1,075 | $ | 2,686 | $ | 3,452 | ||||||||
| Effective tax rate (GAAP) | 26.2 | % | 28.7 | % | 24.4 | % | 43.2 | % | ||||||||
| Adjusted effective tax rate (Non-GAAP) | 26.2 | % | 28.7 | % | 24.4 | % | 29.7 | % | ||||||||
